Partial Freezing of Bank Accounts
Reserve Bank of India has asked Banks to Partially Freeze Accounts of the customers who has yet not complied with the KYC Norms.
What is KYC?
KYC stands for Know Your Customer which was introduced in 2002 by Reserve Bank of India. In simple words KYC is a process to determine the true identity and address of the clients.
KYC consists of two elements – Identity and Address. While the Identity of the customer cannot change, the address may undergo change and thus the banks are required to periodically update their records.
Why is KYC Important?
The main objective behind forcing the KYC Norm by banks is to escape from being used, intentionally or unintentionally by criminal elements for illegal activities such as money laundering etc.
What is “Partial Freezing”?
“Partial Freezing” of the accounts means account holder can deposit or accept money but cannot withdraw or spend means all credits will be allowed and debits will be restricted.
When your account can be “Partially Freeze”?
Before tagging account as a Partial Freeze Account, Banks are required to give due notice of three months, followed by the reminder of three months i.e. banks should partially freeze account only after the period of 6 months is over.
How to revive the “Partial Freeze” Account?
Account holder can revive partially freeze account by furnishing the required documents.
In case, partially freeze account remains non KYC compliant account after 6 months of imposing initial ‘partial freezing’ banks may disallow all debits and credits from/to the accounts, making them inoperative.
Further, the power to close such inoperative account lies with the bank.
How to Submit KYC Documents to the Bank?
In case you have changed the address or have received notice from bank to submit a fresh copy of KYC, you can simply provide a self-certified copy of the document either by mail or post.
Physical presence of the account holder is required only in special cases.